Buzzkill: Medical marijuana popularity threatens legal pot push

Washington state's new law legalizing pot is hitting a major snag from an unlikely source -- medical marijuana.

There is growing concern among state officials that as long as medical marijuana is largely unregulated and untaxed, its popularity will cut into the tax revenue expected when pot legally goes on sale for recreational use in 2014.

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"People thought there were going to be laws surrounding it," said Washington state Republican Sen. Ann Rivers. "Medical marijuana is an avenue to sidestep the laws and regulations and the revenue."

Backers of legalization touted an expected $500 million tax windfall each year from selling recreational pot. But the state's pot consultant, UCLA professor Mark Kleiman, warns competition from medical marijuana could cut in half the amount of tax revenue the state receives.

"The two are not going to be able to exist side by side for very long," said Washington Association of Sheriffs and Police Chiefs Mitch Baker.

Washington state passed its medical marijuana law in 1998. It requires no registry of medical marijuana patients and no taxation. Following passage of Initiative 502, which legalized up to an ounce of marijuana for all adults, the state Liquor Board has been considering a host of regulations. It's agreed to put a 25 percent excise tax on marijuana at three stages; the grower, the seller and the buyer. In addition, the buyer will have to pay the state sales tax.

The bottom line is medical marijuana will be a lot cheaper.

Lawmakers in Olympia debated closing that price gap by slapping a 20 percent tax on medical marijuana. The proposal was met with protest.

"It either is medicine, or it's not medicine," said Steve Sarich who heads the Cannabis Action Coalition. "But it can't be medicine and be taxed."

Sarich points out that no prescription drugs are currently taxed. John Worthington, who used marijuana to ease his chronic back pain, says a tax would push the price of his medicine too high. "I'd either have to go back to pharmaceutical drugs, which I've found to be harmful to me, or I'd have to do it illegally."

Lawmakers failed to pass a tax on medical marijuana in the last legislative session, but backers vowed to try again in 2014, around the same time pot is sold legally to healthy Washingtonians for the first time.

Dan Springer joined Fox News Channel (FNC) in August 2001 as a Seattle-based correspondent.